TRW & Co · Competition and consumer law
UK Merger Control: Thresholds, the Hybrid Test and the CMA Process
UK merger control lets the Competition and Markets Authority review deals where the target's UK turnover exceeds £100 million, the parties share 25% or more of supply, or a new hybrid test is met. Filing is voluntary, but the CMA can call in and unwind completed deals, so threshold analysis belongs at the start of any transaction.
Key pointBecause notification is voluntary, the real risk under UK merger control lives in the deal documents: conditions, long-stop dates and integration limits must anticipate a possible CMA call-in, even where nobody plans to file.
At a glance
Turnover threshold
Since 1 January 2025 the CMA has jurisdiction where the target's UK turnover exceeds £100 million, up from the previous £70 million test.
Share of supply
A combined share of 25% or more of any description of goods or services in the UK, increased by the merger, gives the CMA jurisdiction.
Hybrid test
One party with a 33% UK share of supply and over £350 million UK turnover, plus a UK nexus for the other party, can trigger review.
Small merger safe harbour
There is no relevant merger situation unless at least one party has UK turnover above £10 million, even where shares are high.
Voluntary but enforced
Parties need not notify, but the CMA can investigate completed deals, impose hold-separate orders and, in serious cases, require divestiture.
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The short answer: when does UK merger control bite?
UK merger control is the regime under which the Competition and Markets Authority (CMA) reviews mergers that may reduce competition in the UK. As of October 2026, a deal is reviewable where two or more enterprises "cease to be distinct" and at least one jurisdictional test is met: the target's UK turnover exceeds £100 million, the merger creates or enhances a share of supply of 25% or more, or the new hybrid test is satisfied.
Notification is voluntary. Parties are not legally obliged to file, and they may complete without CMA clearance. But the CMA monitors the market, can open an investigation on its own initiative, and can order a completed deal to be held separate or even unwound. In practice, the real question for deal teams is not "must we file?" but "how likely is the CMA to call this in, and what does that do to our timetable and risk allocation?"
The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) reset the thresholds with effect from 1 January 2025. It raised the turnover test, introduced a small merger safe harbour and created a hybrid threshold aimed at acquisitions by large incumbents of targets with little UK revenue.
The legal framework for UK merger control
The core rules sit in Part 3 of the Enterprise Act 2002, as amended by the Digital Markets, Competition and Consumers Act 2024. The CMA is the decision-maker at both phases. Its procedural guidance on jurisdiction and procedure, and its merger assessment guidelines, explain how it applies the statute; both are published on the CMA's mergers guidance page.
Three concepts drive jurisdiction:
- Enterprises ceasing to be distinct. This covers outright acquisitions, but also the acquisition of "material influence" over another business's commercial policy, which can arise well below 50% ownership. The CMA generally looks closely at shareholdings of around 15% or more, and board seats or veto rights can tip the balance.
- A jurisdictional threshold. Turnover, share of supply or hybrid, as described below. The small merger safe harbour sits on top of these.
- Timing. For completed deals, the CMA normally has four months from completion, or from when material facts were made public, to refer the merger. The DMCC Act allows that window to be extended in certain cases.
Separately, the National Security and Investment Act 2021 gives the government power to screen acquisitions on national security grounds. It is a different regime with a mandatory filing requirement in specified sensitive sectors, and it runs in parallel with UK merger control rather than replacing it. Our guide to the National Security and Investment Act covers that screen in detail.
The UK merger control thresholds after the DMCC Act
The table below summarises the tests in force as of October 2026. A deal needs to satisfy only one of the first three tests, and the safe harbour removes jurisdiction for the smallest deals even if another test would otherwise be met.
| Test | What must be shown | Practical notes |
|---|---|---|
| Turnover test | The target's UK turnover exceeds £100 million | Raised from £70 million by the DMCC Act. Based on the target's UK turnover in its last financial year. |
| Share of supply test | The merged parties together supply 25% or more of goods or services of any description in the UK (or a substantial part of it), and the merger creates or increases that share | Highly flexible. The CMA can choose the "description" of goods or services and the metric, so it is not a market definition exercise. |
| Hybrid test | One party has a UK share of supply of 33% or more and UK turnover over £350 million, and the other party has a UK nexus | Designed for acquisitions of start-ups or pipeline products by large incumbents. The UK nexus can be thin, such as preparing to supply UK customers. |
| Small merger safe harbour | No relevant merger situation unless at least one party has UK turnover exceeding £10 million | Applies even where the share of supply test would otherwise be met. |
Why the share of supply test causes most of the uncertainty
The turnover test is mechanical. The share of supply test is not. The CMA can frame the relevant goods or services narrowly and use measures such as value, volume, capacity or number of employees. A target with modest revenue can therefore fall within UK merger control if the parties are both active in a niche segment.
The government consulted in early 2026 on narrowing this discretion, including a closed list of metrics for share of supply and a closed list of factors for material influence. As of October 2026, those are proposals; they require legislation, and the existing tests continue to apply until any change is enacted and in force.
How the CMA process works in practice
Where a filing is likely, the process typically runs in the following stages. Timings vary considerably with complexity, so treat these as a planning framework rather than a guarantee.
- Jurisdiction and risk assessment. Map UK turnover, overlaps and vertical links, and test whether any threshold is met. Decide whether to file, brief the CMA's mergers intelligence function, or proceed without engaging.
- Pre-notification. Submit a draft Merger Notice and answer CMA questions until the CMA is satisfied the notice is complete. For straightforward cases this stage can be relatively short; for complex ones it can take several months.
- Phase 1. Once the notice is formally accepted, the CMA has a statutory period of 40 working days to decide whether the merger may be expected to result in a substantial lessening of competition (SLC).
- Remedies in lieu, or fast track. If the CMA finds a realistic prospect of an SLC, the parties can offer undertakings in lieu of a reference, usually a clear-cut divestiture. The DMCC Act also lets parties request a fast-track reference to Phase 2.
- Phase 2. An in-depth investigation, with a statutory period of 24 weeks that can be extended. The outcome may be clearance, clearance with remedies, or prohibition.
- Remedies implementation. Final undertakings or an order are agreed and monitored. Breach can now attract significant penalties.
For completed deals, the CMA routinely imposes an initial enforcement order (often called a hold-separate order) at the outset. That restricts integration and can be costly to manage, which is why buyers increasingly negotiate a pre-completion approach where overlaps are material.
Because notification is voluntary, the risk of UK merger control sits in the contract, not just in the filing. Decide early whether CMA clearance is a condition precedent, who bears the cost of remedies, and how a long-stop date accommodates a possible Phase 2. Leaving those points to the sale and purchase agreement mark-up is the most common timing mistake we see.
The CMA's pro-growth approach and the 2026 reform proposals
Since 2025 the CMA has publicly reoriented its mergers work around what it calls the "4Ps": pace, predictability, proportionality and process. In practice that has meant firmer targets for pre-notification, more openness to behavioural remedies in suitable cases, and a stated focus on deals with a genuine UK nexus rather than global transactions with only peripheral UK effects.
In January 2026 the Department for Business and Trade launched a consultation on wider reforms. The proposals included replacing the Phase 2 panel model with committees drawn from the CMA board, outside experts and senior staff, and giving the CMA more time to consider remedies at Phase 1. The government also confirmed that the voluntary notification model will stay.
For deal planning, the key message is that the statute is unchanged in its essentials as of October 2026, but CMA practice has become more predictable for transactions with limited UK overlaps. Parties should check the current position before signing, because guidance can change faster than legislation.
To notify or not: options compared
There is no single right answer. The choice depends on overlaps, deal value, completion pressure and appetite for post-completion risk.
| Option | When it fits | Main risk |
|---|---|---|
| Formal notification before completion | Material horizontal overlaps, high shares or a likely third-party complaint | Timetable: pre-notification plus Phase 1, and possibly Phase 2 |
| Briefing paper to the CMA | Threshold arguably met, but low substantive risk | The CMA may still ask for a full notice |
| Proceed without engagement | No credible threshold, or negligible overlap | Call-in within the four-month window, hold-separate order, and in the worst case unwinding |
| Complete with contractual protection | Commercial pressure to close, moderate risk | Allocation of remedies cost and integration limits must be precisely drafted |
Where UK merger control runs alongside EU, US or other filings, the sequencing matters. The CMA is no longer part of the EU one-stop shop, so a parallel UK review is possible even where the European Commission has jurisdiction.
An illustrative scenario
The following scenario is illustrative only and does not describe any real client or transaction.
A large software group with substantial UK revenue agrees to buy a small analytics start-up. The start-up has no UK revenue yet, but it has a beta product and a sales team preparing to approach UK customers. The turnover test is not met, and on a conventional view the parties do not overlap.
The buyer's advisers nonetheless test the hybrid threshold. If the buyer has a UK share of supply of 33% or more in some description of services and UK turnover above £350 million, the start-up's preparations to sell in the UK may be enough of a nexus. The safe harbour does not help, because the buyer's UK turnover is well above £10 million.
The parties choose to brief the CMA before signing, draft the share purchase agreement so that completion is not delayed by an informal enquiry, and agree that the buyer will not integrate the start-up's product roadmap for the length of the call-in window. That approach preserves the deal timetable while limiting exposure to a hold-separate order.
Risks and common mistakes
Assuming a minority stake falls outside UK merger control
Control under the Enterprise Act includes material influence, which can arise from a minority shareholding combined with board representation, vetoes over budgets or business plans, or industry expertise that gives the investor weight in decisions. Investors in competitors should map these rights carefully. The 2026 consultation proposed a closed list of material influence factors, but as of October 2026 the existing, more flexible approach still applies.
Treating the share of supply test as a market share test
The share of supply test is not the same as antitrust market definition. The CMA can choose a description of goods or services that is narrower than any economic market, and a metric other than revenue. Parties who rely on a market share analysis prepared for another purpose may wrongly conclude that the test is not met. Build the analysis around the CMA's own guidance and its past decisions.
Integrating before the call-in window closes
Rapid integration after completion is often the commercial priority, but it increases the cost of an initial enforcement order and can make any eventual divestiture much harder. Breaching an order now carries penalties linked to worldwide turnover under the DMCC Act. Where the risk of a call-in is real, plan a staged integration that keeps key overlapping assets separable until the position is clear.
Ignoring information request deadlines
The DMCC Act sharply increased the penalties for failing to comply with CMA information requests or for providing misleading information, with fines calculated by reference to worldwide turnover. Internal document collection should start early and be overseen by counsel, because a deal team's emails and board papers will be read closely for evidence about competitive rivalry and deal rationale.
The cross-border angle
Overseas buyers are often surprised by how far UK merger control reaches. The share of supply and hybrid tests can catch businesses with limited UK revenue, and the CMA can now require information from persons outside the UK. Buyers from Bangladesh, the Gulf, Singapore or China investing in UK targets should plan for UK merger control and national security screening side by side, because the same transaction can engage both.
For outbound investors from the UK, the analysis runs the other way. Bangladesh has its own competition regulator under the Competition Act 2012, and many Gulf and Asian jurisdictions operate mandatory pre-closing regimes. A UK-led deal may therefore need several filings with different triggers and timetables. Our M&A team coordinates these workstreams so that a single condition precedent schedule reflects every regime.
What to do next: a checklist for deal teams
- Calculate each party's UK turnover for the last financial year and test the £100 million, £350 million and £10 million figures.
- Identify every description of goods or services in which the parties overlap or have a vertical link, and test the 25% and 33% share thresholds using several metrics.
- Map minority rights, board seats and vetoes for any stake below outright control.
- Decide on a filing strategy and reflect it in conditions, long-stop dates and remedies allocation.
- Check whether the target operates in a sensitive sector under the National Security and Investment Act.
- Prepare internal documents with care, and put a litigation-hold style process in place for deal correspondence.
- Reconfirm the position before signing, given the 2026 reform proposals.
Our merger control solicitors in London advise buyers, sellers and investors on jurisdiction, filing strategy and remedies, working with our competition law team and our foreign investment team. For businesses subject to the separate digital markets regime, see our guide to strategic market status, and for the overall deal timetable, our guide to the M&A process. If you would like to discuss a transaction, please contact our London office.
Frequently asked questions
01Is it mandatory to notify the CMA of a merger?
No. UK merger control is a voluntary regime, so parties can sign and complete without CMA clearance. However, the CMA monitors transactions and can open an investigation on its own initiative, usually within four months of completion or of the deal being made public. If it does, it can impose an order restricting integration and, after a full investigation, require remedies or divestiture. The government confirmed in its 2026 consultation that voluntary notification will remain. Separately, the National Security and Investment Act imposes mandatory filing in specified sensitive sectors.
02What are the current UK merger control thresholds?
Since 1 January 2025, the CMA can review a merger where the target's UK turnover exceeds £100 million, where the merging parties together have 25% or more of supply of goods or services of any description in the UK and the merger increases that share, or where the hybrid test is met. The hybrid test applies where one party has a 33% share of supply and UK turnover above £350 million and the other has a UK nexus. Deals where no party has UK turnover above £10 million fall outside the regime.
03How long does a CMA merger review take?
Pre-notification has no statutory limit and depends on complexity and how complete the draft notice is. Once the CMA formally starts Phase 1, it has 40 working days to decide whether to refer the deal for an in-depth review. A Phase 2 investigation has a statutory period of 24 weeks, which can be extended. Remedies negotiations can add further time. Deal timetables should therefore allow for the possibility of Phase 2 wherever overlaps are material, even if a Phase 1 clearance is the expected outcome.
04Can buying a minority stake trigger UK merger control?
Yes. The regime catches the acquisition of material influence over another business's commercial policy, not just outright control. The CMA examines shareholdings of around 15% or more closely, and board representation, veto rights over strategy or budgets, or other arrangements can amount to material influence. A 2026 government consultation proposed a closed list of relevant factors to make this more predictable, but those proposals require legislation and the existing approach applies in the meantime.
05What is the hybrid threshold in UK merger control?
The hybrid threshold was introduced by the Digital Markets, Competition and Consumers Act 2024 to catch acquisitions by large companies of smaller businesses with little or no UK turnover. It applies where one party has a UK share of supply of at least 33% and UK turnover above £350 million, and the other party has a UK nexus, such as carrying on activities in the UK or supplying UK customers. Unlike the share of supply test, no overlap between the parties is required.
06What happens if the CMA calls in a completed deal?
The CMA usually imposes an initial enforcement order at the start, which prevents further integration and may require a hold-separate manager. It then runs the normal Phase 1 review and, if necessary, a Phase 2 investigation. If it finds a substantial lessening of competition, it can require remedies, including divesting part or all of the acquired business. Breaching enforcement orders can attract penalties calculated by reference to worldwide turnover, so buyers should plan integration with the call-in risk in mind.
Sources and official materials
- Enterprise Act 2002 — Part 3: the UK merger control regime
- Digital Markets, Competition and Consumers Act 2024 — Revised thresholds, hybrid test and CMA powers
- CMA mergers guidance on jurisdiction and procedure — How the CMA applies the jurisdictional tests and runs reviews
- CMA merger assessment guidelines — Substantive assessment of competitive effects
- CMA case register — Current and past merger investigations
- National Security and Investment Act collection — Parallel national security screening
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.